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Exciting Trade Deficit News

| Fri Oct. 9, 2009 7:26 AM PDT

The U.S. trade deficit unexpectedly narrowed for the first time in four months in August, with exports rising to their highest level of the year and imports easing despite higher oil prices.

....The decline, the first since May, was a surprise on Wall Street. Economists surveyed by Dow Jones Newswires had expected a further widening in the deficit to $33.6 billion.

The recent resurgence of oil prices had been pushing the trade deficit back up, after a brief dip earlier in the year when the recession sapped demand for imports. However, exports have enjoyed a five-month uptrend, which bodes well for the economic outlook.

As with a lot of other hopeful indicators, there's no telling if this one will last. But it's essential that it does. Despite what Sarah Palin may think, the U.S. desperately needs a weaker dollar, lower consumption, and an end to the permanent current account deficit. This news probably won't get a lot of attention, but it should.

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Kevin Drum is a political blogger for Mother Jones. For more of his stories, click here.

Comments

WSJ already gripping about the weak dollar

Submitted by Anonymous (not verified) on Fri Oct. 9, 2009 10:50 AM PDT.

This morning the Wall Street Journal had a front page article about the lack of intervention to support the dollar. The editors see the decline of the dollar as a bug, not a feature.

It is a little worrying when

Submitted by g. powell on Fri Oct. 9, 2009 11:10 AM PDT.

It is a little worrying when Asian countries are propping up the dollar and the U.S. is letting it go down. It suggests a lack of coordination that could ignite a crisis.

"Despite what Sarah Palin

Submitted by Another Brad (not verified) on Fri Oct. 9, 2009 11:53 AM PDT.

"Despite what Sarah Palin may think, the U.S. desperately needs a weaker dollar"

This is very, very foolish. So foolish he probably doesn't even understand why it's foolish. I don't think Drum appreciates the disruption in capital markets, creditor/debtor relationships, and overall confidence in global trade that a sliding dollar causes. Gains from exports do little to make up for the greater problems caused by a weaker dollar.

That just means we've

Submitted by Luther on Fri Oct. 9, 2009 12:33 PM PDT.

That just means we've already shipped all our money to China, and maxed out on debt, and can't buy anything more.

We're poor.

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so Brad...

Submitted by an old guy (not verified) on Fri Oct. 9, 2009 6:57 PM PDT.

Without a depreciated dollar, how do YOU suggest the US get its trade back into balance?

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Yeah we're poor...

Submitted by markg8 on Fri Oct. 9, 2009 7:06 PM PDT.

...and wiling to work for American dollars when everybody else is trying to figure how not to take their goods in trade for greenbacks. That's ok we'll work our way out of it and be more self sufficient in the end.

How to tell the difference?

Submitted by Trippp on Sat Oct. 10, 2009 7:57 AM PDT.

Another Brad,

You bring up one of the many questions I have about capitalism. I hear talk about free markets and the invisible hand and, silly my, I think that means prices fluctuate in some perfectly optimal way. Yet you seem to be advocating that we not let the market fluctuate because you call that fluctuation a disruption? This doesn't make sense to me.

If global trade is an overall good then shouldn't it be able to stand, or fall, on its own? Why should we prop it up?

I'm starting to think that capitalist speaks with forked tongue.

Tripp